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In light of the Asian crisis and a slowdown in the Indian economy, the demand for cables remained suppressed, causing a decline in price realisations. However, the company was able to post a marginal rise in bottomline. This has been achieved mainly due to higher volumes. Although there has been a fall in margins, the company is expected to better its performance in the light of a recovery in prices and demand for its products.

Sterlite operates in a market in which the Department of Telecommunications (DoT) is as yet the largest consumer. It has managed to grab a large share of the market and in the recent round of bidding it was awarded cash based orders worth Rs 20.9 bn (19% of total) from the DoT. Although dealing with the government has its own problems related to payment delays, it is nonetheless very attractive given the large volumes involved.

The demand from private sector telecom companies is likely to grow at a fast pace for the next couple of years as they increasingly invest in building up their infrastructure. This will stimulate the demand for the company's products.

Market View:
The stock has been rated as a 'BUY' mainly on account of the improving demand scenario emerging after large orders, totaling 33.3 m cable km, already having been placed with cable companies.

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